Does Investment Banking Miss Out on Future MDs?
I've been giving some thought to the journey of senior bankers and trying to grasp the general consensus on this matter. It got me thinking about the traditional path in investment banking, which often leads bankers to the buy side. It's no secret that the buy side is a highly sought-after position, attracting some of the brightest minds in the industry. But here's a curious question: does this mean that investment banking might miss out on potential talented Managing Directors (MDs) as these bright minds transition to the buy side at an early stage?
On the flip side, there are those who choose to stay in banking because they genuinely see it as a long-term career. These individuals possess a genuine passion for the world of banking and may have what it takes to thrive as MDs. Now, I must confess, I'm not exactly well-versed in who exactly ends up staying in banking. Are we talking about the ones who didn't jump ship to the buy side or the seasoned and driven MDs?
It's been said by many of the bank CEOs that junior attrition is a big issue that they cannot solve for. It certainly is a big talent exodus and results in an exhausting and very expensive exercise of re-training new analysts, associates and VPs every year as so few people stick around. IMO I think that is a bigger issue than potentially missing out on talented MDs. Even as someone a bit more senior I spend a truly ridiculous amount of time every year training new hires. They're all smart and willing, but if even 20% of people stuck around that would be a much more productive group since not everyone would be new all the time.
That said... MD is essentially a sales job, you have very high revenue targets that you are dying to hit every quarter. Most people do not want to do sales and be at the beck and call of their clients at literally all hours. Not that PE MD is a super cushy, low-stress life either but you don't have big-bank earnings and targets to manage around, and you are the client so have more control over workstream timing.
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